Sugar stocks gain on hopes of govt de-control

MUMBAI: Sugar stocks turned sweet on Thursday on hopes the government would decontrol the sector from October 1, which would let mills freely sell sugar without awaiting release orders.

Mills are currently obliged to deliver 10 per cent of the sugar they produce as 'levy' for the public distribution system. As for the remaining 90 per cent, free sale quota that can be sold in the open market, the centre decides the quantum of such sugar to be offloaded by each mill in a particular month.

The proposal before the cabinet is to do away with both these restrictions, so that from the new crushing season, mills can freely sell their entire sugar without awaiting 'release orders' from the Directorate of Sugar.

As regards the public distribution system, the state governments will have the option to procure sugar from the open market and obtain a fixed reimbursement from the centre for selling at below market price through ration shops.

At noon, shares of Oudh Sugar, Bajaj Hindusthan, Balrampur Chini Mills were up 0.5 to 3 percent on the hopes of the decontrol even as the rest of the market was down sharply on account of selling pressure. The Bombay Stock Exchange's Sensex shed 5.04 per cent or 688 points at 12,976.31 and National Stock Exchange's Nifty was 4.94 per cent or 202 points lower at 3890.95.